I’m not going to spend time with this post saying piracy is bad blah blah. Instead, what I find interesting is that number, 90%.

In just about every sales postmortem that I’ve read that gave detailed stats, that has been about the number you see, 90%. It seems to be standard. Doesn’t matter if you’re EA or indie, or what the price level is. That 90% piracy rate stays pretty constant. It can’t be attributed to poor college students who don’t have the money to pay for games yadda yadda, you’re talking about people with Android phones ripping off a $2 game here. Though much of the piracy seems to come from Eastern Europe, and price disparity in poorer countries is a problem, I doubt $2 is out of most people’s reach.

And equally interesting is that the sales figures on the heavily pirated version, Android, are about equivalent to the iOS devices. That too is very interesting. It’s easy to conclude from that fact that “see, piracy doesn’t affect sales”, but that would be making conclusions from incomplete information. It would only be true if it had equal amounts of exposure on both platforms, and we don’t know that. It’s hard to know without more information, but it does suggest it.

For myself, I long ago accepted that any game I make, if it becomes successful enough to attract attention, will have a 90% piracy rate. Or, perhaps a better way to phrase it because it doesn’t directly imply that every pirate copy is “consuming” what would otherwise be legitimate sales, I have accepted that for every 1 legitimate customer I gain, I will in turn gain 9 free-riders.

In other words, if you imagine hosting a music festival in the park, gated off to limit access to people who’ve bought tickets, I know that for every 1 person that pays to get through the gate, 9 people will just camp outside the cordoned off area, near enough to listen to the music without paying. I use this example because I live near a park that regularly holds such musical events, and you see that every single time.

Now, when I think of it like this, my immediate question is not how to “fight” piracy, because those people are not folks who’ve illegally jumped the fence and I have to get security to chase them to make sure they’ve paid for tickets. Instead, I begin to wonder how I can take advantage of those free riders. How can I make money off them, or tempt them to buy tickets to get access to the paid area. Or, better yet, both.

You see, although Kickstarter may be in danger of becoming a bit too much of a circus show with developers trying to out compete each other with amusing videos and in offering exciting new reward tiers for pledges, one of the things I think it gets right (and this is the same reason I think decent DLC is a good idea) is that it allows people with differing levels of interest to invest in a game to differing degrees. Having one price point for a game is appealing to an “average” consumer. No such thing exists in real life, every individual has different degrees of enthusiasm for a thing. There are forums out there of people who’ve dedicated years of their lives to talking about Fallout, or following the products of a certain group of developers whose ideas and ideals they strongly identify with.

There is absolutely nothing wrong with recognizing that and attempting to offer more to the more committed fans. In many ways, the games industry is far behind the other big media industries, who have for a long time offered a more sophisticated, multi-tiered approach to selling to customers, allowing them to make money from all levels of commitment.

Consider the music industry, and a specific song. At the bottom rung are people who are very casual listeners, I wouldn’t even call them fans. They can enjoy the song for free on the radio or TV. They are not directly paying for it, but radio and TV makes money by selling advertising. Their customers are actually the advertisers, and the product they sell them is your attention. That’s why they pay for song and tv show licenses, to give you a reason to pay attention to their channels and give them the numbers they need to sell advertising slots to advertisers.

So, in this way, the casual listener is “monetized”. Monetization is a bit of a dirty word amoungst most gamers, mainly because we’re aware of how often companies are simply looking for ways to exploit us when they use these kinds of buzzwords. But in this post, I’m just meaning it as “making money from people who partake of your product”. I think we can all agree that it is fair for developers to try to make money from their product in that way, and that in this sense it’s not unethical, evil or what have you.

Then you have the next tier up. People who actively like the song. They’re fans, but at this point they’re only fans of this song. They may go on iTunes or a physical store looking to buy that track. But this results in more “value” than simply the money you make off the sale of the song. Because this customer will probably see links to other songs that the artist has produced, they’ll learn about the artist, browse through the other tracks on a physical CD etc. So in that way :

Value gained = (profit from sale of track) + (advertising/exposure)

This person may also tell their friends about the track, leading to further advertising via the word-of-mouth effect.

The next tier is proper fans. They don’t just buy one track because they heard it one time and liked it. They’ve started following that artist actively. They want to know what that artist is going to produce next. They track the artist’s upcoming releases, and recommend the artist, not just the song, to their friends. The word-of-mouth effect is stronger, and you don’t have to spend as much advertising money/effort to reach these fans to tell them about new products. They’re doing the work for you. And they’ll probably come to your concerts, and help advertise them in the same way.

The next tier is only a small step further than the previous tier. These are fans, but they’re fans who’re also willing to go beyond the music/live shows and buy extra merchandise. They buy band t-shirts and memorabilia. They place particular value on personalized gear, stuff signed by the band in person, or a drumstick thrown into the audience by the drummer of the band. Things that authentically connect them to the band. Personal interaction is treasured.

The final tier is the die-hard fan. These people they identify with your brand on a very fundamental level. It’s part of their personal identity in some way, and they value it to an even larger degree than the previous tier. These are not just fans of Elvis, these are Elvis impersonators. These are the people who will travel across country to see their favourite bands. Who know all the trivia, who buy the books about the formation of the band and its history. They want to do anything they can to get closer to the band and the music. This may or may not veer slightly into crazy groupie territory, but hey.

So returning to games, the lesson here is that it’s a good idea to treat consumers as having differing levels of investment and enthusiasm, and to create a set of tiered products to try to monetize each tier. Back to the problem of game piracy, the free-loaders are that bottom-most tier. They’re the people who’ll listen, but not pay. At least, not immediately. Now how do you monetize them?

It’s a question I can’t say I have an answer for, exactly. One of the ways is to include mechanisms for spreading word-of-mouth, things like posting to facebook and twitter. I’m not a huge fan of games which do that by default, it’s a bit spammy, but perhaps if you show a once-off screen asking players to share on facebook if they like the game, the pirates may feel like it’s a harmless way to pay you back. Or perhaps if you tie it to bragging, record some feat they pull off in-game and offer them the chance to post it online…these are ideas I’ve been mulling over. How to turn free-loaders into free advertising.

(Before anyone suggests “put in adverts!” you generally have to have high player numbers for advertisers to sign on, and it doesn’t have a great return from what I’ve read unless you get really high numbers. Not to mention that actual adverts in a game are pretty icky, and easily hacked out.)

Returning to the music in the park metaphor, in terms of tempting them to buy tickets to the show, the obvious answer is making the gated-off area more desirable in a significant way. You can see that the games industry has cottoned onto that concept, at least, with special DLC and access passes. But I’m not sure they’re doing it right, as often their efforts seem to move in the direction of removing content that feels like it belongs in the base product instead of offering more value to premium customers. A better example is in things like pre-order campaigns and Kickstarter, where “getting in on it early” will give you early access to game builds or member-only forums for direct contact with the devs so you can influence how the game turns out. That feels much more like a legitimate “VIP benefit”.

I’d be interested in hearing any thoughts about this in the comments. Perhaps you’ve got an idea, perhaps you’ve seen a great example of using free-riders to the dev’s advantage. Thinking about how to work this for an RPG, my favourite genre, is especially tricky, I find.

An interesting fact: The thing about pirates is that pirates generally play more games than paying customers. So there might only be half the marketplace pirating games, but each pirate downloads 10X more games than the legit users.

Steam sales are a great example of offering something for everyone in terms of pricing. When the game comes out, everybody willing to pay $60 for it does so. Then some months later the price drops to $40 (something that some game stores DON’T do for reasons that baffle me). Then after that, that game will begin to appear in sales at some ridiculous discount. The reasoning being that you can’t sharply drop prices permanently because people will start seeing less value in your product … but if you temporarily drop the price, they’ll see it as an opportunity: you get to buy a $30 game for a third or less of its “real” value.

On the piracy side of things, it’s complicated. I feel like word of mouth is one of the best types of advertising you can get and that trying to force it (share us on facebook! PLEASE) might actually be counter-productive if not handled with care… people don’t react well when they feel like they are being exploited, even when they are being exploited by something that they didn’t pay for and should have.

And about word of mouth, I also fear that you’re right, that forcing it on people by begging them to like your game on facebook, might have the opposite effect. I like to think about these kinds of concepts, but I’m not sure on what would be a good idea and what wouldn’t.